First Calgary Petroleums Ltd. 2006 Second Quarter Results
TSX: FCP LSE: FPL
CALGARY, July 31 /CNW/ - First Calgary Petroleums Ltd. (First Calgary,
FCP or the Company) announces its results for the six months ended June 30,
2006.
Highlights
- Updated Final Discovery Report presented to Sonatrach, refining MLE
development plan
- On track with MLE project timeline that includes field declaration
of commerciality in the second half of 2006 with first production
targeted for 2009
- Citigroup appointed in July 2006 as sole financial advisor on
project debt financing for the development of the MLE field
- Aggressive exploration and appraisal programme funded through 2006
and into 2007 following successful $143 million equity financing
- 2006 full year capital budget expanded to $150 million, increasing
drilling programme to a total of 12 wells
- LEW-2 appraisal well result positive for the overall structure but
restricted reservoir volume encountered
- Testing operations underway on recently completed exploration well,
ZER-1
- Recent results from exploration wells GSM-1 and GSME-1 being
reviewed by FCP and Sonatrach
- LES-4 well appraising LES-3 oil discovery currently drilling -
candidate for early oil development if LES-4 successful
- Further seven appraisal and exploration wells scheduled for
remainder of 2006, including recently spudded appraisal well MZLS-2
Richard Anderson, President and CEO, commented:
"Our fast track MLE field commercialisation plan is progressing on
schedule. We have an aggressive drilling programme in the next six months,
with three rigs currently employed and seven further wells planned."
Enquiries:
First Calgary Petroleums Ltd., Richard G. Anderson, President and CEO,
Tel: (403) 264-6697 or
John van der Welle, Finance Director and CFO, Tel: +44 (0) 203 043 0270,
Website: www.fcpl.ca
Other contacts: James Henderson, Pelham Public Relations,
Tel: +44 (0) 207 743 6673;
Carina Corbett, 4C - Burvale Limited, Tel: +44 (0) 207 907 4761.
FCP has scheduled a conference call on July 31, 2006 for 11:30 a.m. EDT,
4:30 p.m. BST for investors and analysts. To participate in the conference
call, please dial:
UK: +44 (0) 208 515 2310 (4:30 p.m. BST)
North America: +1 416 644 3416 (11:30 a.m. EDT)
An archived recording of the conference call will be available for 5 days
by calling:
UK: +44 (0) 208 515 2499 Passcode: 636548 followed by the
number sign
North America: +1 416 640 1917 Passcode: 21198227 followed by the
number sign
First Calgary Petroleums Ltd. is an oil and gas exploration company
actively engaged in international exploration and development activities in
Algeria. The Company's common shares trade on the Toronto Stock Exchange in
Canada (FCP) and on the AIM market of the London Stock Exchange in the UK
(FPL).
This news release includes statements about expected future events and
financial results that are forward-looking in nature and subject to risks and
uncertainties. FCP cautions that actual performance may be affected by a
number of factors, many of which are beyond its control. Future events and
results may vary substantially from what First Calgary Petroleums Ltd.
currently foresees.
First Calgary Petroleums Ltd.
Second Quarter Report
For the Six Months ended June 30, 2006
President's Report to Shareholders
During the second quarter of 2006 First Calgary continued to pursue its
strategy of:
- commercialising Ledjmet Block 405b with a staged development plan
starting with the MLE field area of the block; and
- increasing proved and probable reserves through an aggressive
drilling programme and completion activities.
Operational Progress
Operational activity in the second quarter increased significantly with
three drilling rigs operating on Ledjmet Block 405b for the first time. During
this period, three exploration wells have completed drilling: ZER-1, GSM-1 and
GSME-1. ZER-1 has been cased and testing operations recently commenced.
Testing operations at GSM-1 were completed on 29 July 2006; currently the test
data are being reviewed and analysed. GSME-1 has been logged and cased and
technical data are being reviewed by FCP and Sonatrach.
Production testing of the LEW-2 appraisal well was also completed in the
quarter. The well flowed at over 10 mmcf/d and while the test data confirmed
the overall prospectivity of the structure, it also indicated LEW-2 had
penetrated a Lower Devonian reservoir compartment of restricted volume, likely
due to local faulting.
With the five year exploration phase on Block 405b ending in December
this year, in order to continue exploration and appraisal drilling FCP has
expanded its 2006 full year capital budget to a total of $150 million, to
include another six wells in 2006, making a total of 12 wells. The next three
wells are LES-4, MZLS-2 and MZLN-2 and each will be appraising existing
discoveries. LES-4 is currently drilling and is a step-out to the oil
discovery well at LES-3, which is a candidate for early development, and
MZLS-2 has also recently spudded. Further well locations will be decided in
the future depending on the results of the current drilling and testing
programme. When Block 405b reaches the end of its five year exploration
period, the part of the block without discoveries will be relinquished and we
will move into the two year appraisal phase, during which plans for the
further development of the retained area will be formulated.
On June 26 FCP announced the planned relinquishment of our interest in
Rhourde Yacoub Block 406a, in order to focus our activities fully on
Block 405b.
Financing
During the quarter FCP increased its cash resources by $143 million from
an equity financing of 19,445,636 common shares. Proceeds from this financing
have provided First Calgary with the financial strength to continue its
aggressive exploration and appraisal drilling programme through 2006 and into
2007, and to progress the commercialisation of the MLE field.
In July 2006 First Calgary announced that Citigroup has been appointed
sole financial advisor to the Company on raising project debt for the
development of the MLE field.
Commercialisation
During the quarter, FCP presented an updated Final Discovery Report to
Sonatrach that refined the MLE development plan. Discussions regarding terms
for marketing the natural gas were advanced significantly during the quarter.
Once the marketing terms are agreed in principle, an Exploitation License
Application (ELA) will be submitted to the Algerian Ministry of Energy and
Mines. FCP remains on-track with its project timeline that includes an ELA
approval in the second half of 2006 leading to development commencement next
year and first production in 2009.
Algerian Hydrocarbon Law
FCP has noted the changes to the hydrocarbon laws recently announced by
the Algerian Government. These changes will be carefully reviewed when the
legislation is published to determine the impact, if any, on FCP's interest in
Block 405b.
Outlook
The plan for the rest of 2006 is to finalise the gas marketing terms, and
obtain ELA approval for the MLE development, whilst continuing with our
drilling and testing programme ahead of the Block 405b partial relinquishment
at year end. In addition, we will be progressing the front end engineering and
design (FEED) work on MLE, and increasing our focus on project debt finance
for the field.
Management's Discussion and Analysis
Management's discussion and analysis (MD&A) should be read in conjunction
with the unaudited interim financial statements for the three and six month
periods ended June 30, 2006 and 2005 and the 2005 Annual Report incorporating
the audited financial statements and MD&A for the year ended December 31,
2005. In this discussion and analysis $ refers to the U.S. dollar and C$
refers to the Canadian dollar. Additional information is available on FCP's
website at www.fcpl.ca or on SEDAR's website at www.sedar.com.
Ledjmet Block 405b
Exploration and Appraisal Operations
Since mid-April 2006 the Company has had three drilling rigs and two
wireline production testing units operating on Ledjmet Block 405b.
In the past month three exploration wells have completed drilling: ZER-1,
GSM-1 and GSME-1. ZER-1 has been cased and testing operations are underway.
Testing operations at GSM-1 have just been completed (29 July 2006); currently
the test data are being reviewed and analysed. The GSME-1 well has been logged
and cased and technical data are being reviewed by the technical staff of FCP
and Sonatrach.
Production testing operations on the LEW-2 appraisal well, drilled 3.5 km
NE of the 2004 LEW-1 discovery well, have recently been completed and
confirmed the overall prospectivity of the structure. The well encountered a
significant hydrocarbon column and flowed with a final flow rate of 10.6
mmcf/d gas and 825 bopd (choke 40/64") at 1,686 psig from the Lower Devonian
F6-1 horizon. While this result is encouraging for the overall structure, the
test data indicate that the LEW-2 borehole penetrated a Lower Devonian
reservoir compartment of restricted volume, likely due to local faulting.
A further six appraisal and exploration wells are scheduled during the
remainder of 2006, in addition to currently drilling wells LES-4, a step-out
to the recently announced oil discovery at LES-3, and recently spudded
appraisal well MZLS-2. This programme will complete our exploration drilling
on the block as we approach the end of the five year exploration phase which
expires on December 29, 2006. Success with LES-4 could present an early oil
development candidate.
At year end the part of Block 405b without discoveries will be
relinquished, and the FCP and Sonatrach joint venture will commence the two
year appraisal period under the PSC. In addition to appraisal activity in this
period, plans for the further development of the retained area will be
formulated by the joint venture.
During the three months ended June 30, 2006, First Calgary spent
$35 million on the following exploration and appraisal activities on the
Block:
- ongoing geological and geophysical analysis and studies;
- completed and production tested the LEW-2 well;
- drilled and cased the GSM-1 and ZER-1 exploration wells;
- drilled the GSME-1 exploration well;
- commenced production testing on the GSM-1 well; and
- prepared access roads and drill platforms for future drilling
locations.
MLE Commercialisation
During the quarter, FCP presented an updated Final Discovery Report to
Sonatrach that refined the MLE development plan. Discussions regarding terms
for marketing the natural gas continued during the quarter. Once the marketing
terms are finalised, an Exploitation License Application (ELA) will be
submitted to the Algerian Ministry of Energy and Mines.
Rhourde Yacoub Block 406a
After completing a review of the block potential with Sonatrach, First
Calgary has agreed to relinquish its interests in Block 406a effective
August 10, 2006, in accordance with the terms of the joint venture agreement.
Capital Expenditures
The Company's capital expenditures in the three and six month periods
ended June 30, 2006 totaled $41 and $76 million, respectively. The comparable
2005 capital expenditures were $11 and $23 million, respectively. The
increased spending level is the result of three drilling rigs operating in
2006 compared to one in 2005.
Three Months Six Months
June 30, 2006 (000's) Ended Ended
-------------------------------------------------------------------------
Drilling, completion and testing $ 34,105 $ 58,066
Geological and geophysical 894 1,646
MLE commercialisation 634 6,032
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$ 35,633 $ 65,744
Block management and administration 5,299 10,044
Corporate 190 230
-------------------------------------------------------------------------
$ 41,122 $ 76,018
-------------------------------------------------------------------------
Included in the above-noted capital expenditures is $0.9 and $1.6 million
of non-cash stock-based compensation expense for the three and six month
periods ended, respectively.
Full year capital expenditure is currently budgeted at $150 million.
Liquidity and Capital Resources
In April 2006, FCP raised $143 million in net proceeds from an equity
financing of 19,445,636 common shares. Additional funding is derived
periodically from the exercise of stock options and warrants. During the six
months ended June 30, 2006 FCP issued 834,075 common shares from the exercise
of employee stock options, resulting in $2.4 million in proceeds. Without
revenue from oil and gas operations, FCP relies upon equity to fund its
business and capital programmes.
Development of the Ledjmet Block 405b reserves through to commercial
production will require significant funding. The current estimate of
development capital expenditure for the MLE field development is $840 million,
with 75 percent being FCP's share assuming Sonatrach exercises its right to
back-in for 25 percent. Funding is expected to be in the form of project debt,
equity, joint ventures or some combination thereof. With the current high
commodity price environment, the capital markets appear receptive to the oil
and gas industry and the Company believes this environment will continue into
the foreseeable future. First Calgary has been approached by a number of
parties seeking to fund the Ledjmet development and has appointed Citigroup as
sole advisor to the Company on project debt for the MLE field development. To
date no financing arrangements have been entered into, however the Company is
optimistic the necessary funding will be available when required under
reasonable commercial terms.
The Company's working capital at June 30, 2006 was $170.8 million
compared to $92.9 million at last year end. Changes in the Company's working
capital were primarily a function of its capital expenditures and equity
financings, as detailed below:
SOURCES (USES) OF WORKING CAPITAL
-------------------------------------------------------------------------
Working capital at December 31, 2005 $ 92,920
Equity financing 142,999
Capital expenditures (74,384)
Proceeds from the exercise of employee stock options 2,359
Foreign exchange gain 6,860
Other 72
-------------------------------------------------------------------------
Working capital at June 30, 2006 $ 170,826
-------------------------------------------------------------------------
The Company is listed on the Toronto Stock Exchange and the AIM market of
the London Stock Exchange. The fully-diluted number of shares outstanding at
the following dates were:
SHARES OUTSTANDING July 27, June 30, December 31,
2006 2006 2005
-------------------------------------------------------------------------
Common shares 223,143,305 223,127,305 202,847,594
Employee stock options 9,447,958 9,438,958 9,132,033
-------------------------------------------------------------------------
Fully-diluted shares outstanding 232,591,263 232,566,263 211,979,627
-------------------------------------------------------------------------
Operating Results and Selected Quarterly Information
2006 2005
(000's of
U.S. dollars) Q2 Q1 Q4 Q3 Q2 Q1
-------------------------------------------------------------------------
Interest $ 1,902 $ 886 $ 887 $ 1,039 $ 428 $ 659
-------------------------------------------------------------------------
Expenses
General and
administrative 1,477 1,272 1,192 1,001 1,414 1,139
Stock-based
compensation 682 911 3,892 373 503 746
Foreign exchange
loss (gain) (6,854) (6) (70) (2,181) 932 1,527
Other expenses 20 22 54 49 46 (33)
-------------------------------------------------------------------------
(4,675) 2,199 5,068 (758) 2,895 3,379
-------------------------------------------------------------------------
Income (loss) 6,577 (1,313) (4,181) 1,797 (2,467) (2,720)
Income (loss)
per share 0.03 (0.01) (0.02) 0.01 (0.01) (0.01)
Total Assets $641,938 $491,776 $482,776 $478,103 $475,286 $375,384
-------------------------------------------------------------------------
2004
(000's of
U.S. dollars) Q4 Q3
-------------------------------------
Interest $ 386 $ 251
Expenses
General and
administrative 1,165 904
Stock-based
compensation 1,442 975
Foreign exchange
loss (gain) (820) (2,151)
Other expenses (102) 109
-------------------------------------
1,685 (163)
-------------------------------------
Income (loss) (1,299) 414
Income (loss)
per share (0.01) 0.00
Total Assets $393,042 $179,912
-------------------------------------
Interest income increased to $1.9 million during the second quarter of
2006 as a result of income earned on the April equity financing proceeds.
During the quarter the Company recorded a foreign exchange gain of
$6.8 million. The majority of this gain was realized from converting its April
equity financing proceeds (denominated in C$ and British pounds) into US
dollars.
General and administrative costs were $1.5 million in the second quarter
of 2006 compared to $1.3 million in the first quarter of 2006. The increase is
primarily the result of growing employee levels required to manage and operate
the Algerian projects.
Business Risks and Uncertainties
The MD&A for the year ended December 31, 2005 includes an overview of
certain business risks and uncertainties facing the Company. Those risks
remain in effect as at June 30, 2006.
Outlook
First Calgary's strategy is primarily to commercialise Ledjmet Block 405b
and increase proved and probable reserves.
In the short-term, activities include:
- Approvals for the development plan on the first stage of Block 405b
development, the MLE field, are expected in the second half of 2006;
- Advisors Citigroup have been appointed and will continue to work
with FCP to assist in obtaining project debt financing for the MLE
field development;
- Exploration prospects are being drilled within the contractual
exploration period of the block to maximise the retention of block
acreage for appraisal following the partial relinquishment at the
end of the exploration phase this December; and
- The Company is appraising the central area of the Block 405b to
enable it to begin formulating a second stage development plan to
follow MLE. In addition, the LES-3 oil discovery is currently being
appraised with a step-out well (LES-4) prior to consideration of a
potential early oil development plan.
Advisory Regarding Forward-Looking Statements
Certain information with respect to the Company contained in this report,
including management's assessment of future plans and operations, contains
forward-looking statements. These forward-looking statements are based on
assumptions and are subject to numerous risks and uncertainties, some of which
are beyond FCP's control, including the impact of general economic conditions,
industry conditions, volatility of commodity prices, currency exchange rate
fluctuations, reserve estimates, environmental risks, competition from other
explorers, stock market volatility and ability to access sufficient capital.
FCP's actual results, performance or achievement could differ materially from
those expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any events anticipated by the
forward-looking statements will transpire or occur.
July 30, 2006
FIRST CALGARY PETROLEUMS LTD.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
-------------------------------------------------------------------------
June 30 December 31
2006 2005
-------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and short-term deposits $ 190,075 $ 107,882
Accounts receivable 862 338
Deposits and prepaid expenses 872 387
-----------------------------------------------------------------------
191,809 108,607
Property, plant and equipment 450,129 374,169
-------------------------------------------------------------------------
$ 641,938 $ 482,776
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $ 20,983 $ 15,687
Asset retirement obligations 506 436
Shareholders' equity:
Capital stock (note 2) 631,583 484,694
Contributed surplus (note 2) 16,073 14,430
Cumulative translation adjustment 6,502 6,502
Deficit (33,709) (38,973)
-----------------------------------------------------------------------
620,449 466,653
Operations and commitments (note 1)
-------------------------------------------------------------------------
$ 641,938 $ 482,776
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Statements of Operations and Deficit
(Expressed in thousands of U.S. dollars)
(Unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
2006 2005 2006 2005
-------------------------------------------------------------------------
Revenue:
Interest $ 1,902 $ 428 $ 2,788 $ 1,087
-------------------------------------------------------------------------
Expenses:
General and administrative 1,477 1,414 2,749 2,553
Foreign exchange loss (gain) (6,854) 932 (6,860) 2,459
Stock-based compensation
(note 2) 682 503 1,593 1,249
Capital taxes (recovery) (22) 25 (33) (29)
Depreciation and accretion 42 21 75 42
-------------------------------------------------------------------------
(4,675) 2,895 (2,476) 6,274
-------------------------------------------------------------------------
Income (loss) for the period 6,577 (2,467) 5,264 (5,187)
Deficit, beginning of period (40,286) (34,122) (38,973) (31,402)
-------------------------------------------------------------------------
Deficit, end of period $ (33,709) $ (36,589) $ (33,709) $ (36,589)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income (loss) per share
(note 2)
Basic and diluted $ 0.03 $ (0.01) $ 0.02 $ (0.03)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
(Unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
2006 2005 2006 2005
-------------------------------------------------------------------------
Operating activities:
Income (loss) for
the period $ 6,577 $ (2,467) $ 5,264 $ (5,187)
Items not involving cash:
Stock-based compensation 682 503 1,593 1,249
Unrealized foreign exchange
loss (gain) (607) 931 (670) 2,794
Depreciation and accretion 42 21 75 42
-------------------------------------------------------------------------
6,694 (1,012) 6,262 (1,102)
Change in non-cash
working capital (636) 1,615 1,863 (1,206)
-------------------------------------------------------------------------
6,058 603 8,125 (2,308)
Financing activities:
Proceeds from issuance
of shares 150,941 110,502 150,941 110,502
Proceeds from exercise of
options and warrants 2,202 320 2,359 698
Issue costs (7,942) (5,849) (7,942) (5,864)
-------------------------------------------------------------------------
145,201 104,973 145,358 105,336
Investing activities:
Capital expenditures (40,150) (10,578) (74,384) (23,087)
Change in non-cash
working capital (2,938) (4,479) 3,101 (17,423)
-------------------------------------------------------------------------
(43,088) (15,057) (71,283) (40,510)
-------------------------------------------------------------------------
Change in cash and short-term
deposits 108,171 90,519 82,200 62,518
Effect of exchange rate
fluctuations on cash and
short-term deposits (77) (931) (7) (2,794)
Cash and short-term deposits,
beginning of period 81,981 52,010 107,882 81,874
-------------------------------------------------------------------------
Cash and short-term deposits,
end of period $ 190,075 $ 141,598 $ 190,075 $ 141,598
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Notes to Interim Consolidated Financial Statements
Six months ended June 30, 2006 (unaudited)
(Expressed in thousands of U.S. dollars unless otherwise indicated)
-------------------------------------------------------------------------
The interim consolidated financial statements of First Calgary Petroleums
Ltd. ("First Calgary", "FCP" or "the Company") have been prepared by
management in accordance with accounting principles generally accepted in
Canada following the same accounting policies as the consolidated
financial statements for the year ended December 31, 2005. The
disclosures included below are incremental to those included with the
annual consolidated financial statements. The interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto for the year ended December
31, 2005.
1. Operations and commitments:
The Company's operations are in Algeria where it has the rights to
explore, appraise and develop Ledjmet Block 405b ("Block 405b"). The
Company's rights and obligations on Block 405b are set out in a
Production Sharing Contract (PSC) with Sonatrach, the national oil
company of Algeria. The contract is described in the Company's
December 31, 2005 annual financial statements and Annual Information
Form. Changes to the terms or commitments of the Block 405b contract
and the Yacoub Block 406a agreement are detailed in the following.
(a) Block 405b:
During the quarter FCP fulfilled its remaining work commitment
under the production sharing agreement by drilling the ZER-1
well.
(b) Block 406a:
After completing a review of the block potential with
Sonatrach, the Company has agreed to relinquish its interests
in Block 406a effective August 10, 2006, in accordance with the
terms of the joint venture agreement.
The development of the Ledjmet Block 405b reserves through to
commercial production will require additional funding in the form of
project debt, equity, joint ventures or some combination thereof. In
July 2006 First Calgary appointed Citigroup as sole financial advisor
to the Company on raising project debt for the development of the MLE
field on Ledjmet Block 405b. FCP is currently evaluating several
development scenarios for the MLE field where the current estimate of
development costs is $840 million. FCP is obligated to finance 75
percent of the development expenditures assuming Sonatrach will
exercise its right to participate in the development.
2. Capital stock:
(a) Issued share capital:
---------------------------------------------------------------------
Number of
Shares Amount
---------------------------------------------------------------------
Common shares:
Balance, December 31, 2005 202,847,594 $ 484,694
Issued on public offering (i) 19,445,636 150,941
Issued on exercise of employee
stock options 834,075 2,359
Transfer from contributed surplus on
exercise of stock options - 1,531
Issue costs - (7,942)
---------------------------------------------------------------------
Balance, June 30, 2006 223,127,305 $ 631,583
---------------------------------------------------------------------
---------------------------------------------------------------------
(i) In the second quarter, the Company issued 19,445,636 common
shares for gross proceeds of $150.9 million (9,900,178
common shares at GBP 4.40 per share and 9,545,458 common
shares at C$9.00 per share). The issue costs were
$7.9 million.
(b) Employee stock options:
The Company has up to 10 percent of its issued and outstanding
common shares available for issuance pursuant to the Stock
Option Plan. Stock options granted under the plan have a term of
five years and vesting terms are determined at the discretion of
the Board, ranging between two and three years. The exercise
price of each option is equal to the closing market price of the
shares on the date preceding the date of the grant. The
following table summarizes the changes in stock options
outstanding at June 30, 2006:
---------------------------------------------------------------------
Number of Weighted Average
Options Exercise Price
---------------------------------------------------------------------
Outstanding, December 31, 2005 9,132,033 C$ 4.95
Grants 1,191,000 9.45
Exercised (834,075) 3.18
Cancelled (50,000) 10.95
---------------------------------------------------------------------
Outstanding, June 30, 2006 9,438,958 C$ 5.64
---------------------------------------------------------------------
---------------------------------------------------------------------
The following table summarizes information about the options
outstanding and exercisable at June 30, 2006:
---------------------------------------------------------------------
Options Outstanding Options Exercisable
---------------------------------------------------------------------
Weighted
Average
Remaining Weighted Weighted
Contractual Average Average
Range of Life Exercise Exercise
Exercise price Options (years) Price Options Price
---------------------------------------------------------------------
C$0.50-0.82 670,000 0.4 C$ 0.68 670,000 C$0.68
C$1.25-1.25 455,000 1.2 1.25 455,000 1.25
C$2.36-2.95 761,000 1.6 2.59 761,000 2.59
C$4.72-4.72 2,167,500 2.3 4.72 2,167,500 4.72
C$6.21-6.39 3,301,458 4.4 6.28 1,032,789 6.28
C$7.45-8.59 704,000 3.3 7.80 469,001 7.67
C$8.65-10.95 1,016,000 4.4 9.39 73,335 9.63
C$11.10-15.77 364,000 3.4 11.77 254,002 11.67
---------------------------------------------------------------------
9,438,958 3.2 C$ 5.64 5,882,627 C$4.59
---------------------------------------------------------------------
---------------------------------------------------------------------
(c) Stock-based compensation expense:
For the six months ended June 30, 2006, the Company recorded
$3.2 million (2005 - $1.2 million) of stock-based compensation
expense with a corresponding increase in contributed surplus
(three months ended June 30, 2006 - $1.6 million; 2005 -
$0.5 million). Of the total stock-based compensation expense,
the Company has capitalized $0.9 and $1.6 million for the three
and six month periods ended June 30, 2006, respectively (2005 -
nil).
The fair value of the options granted in the three months ended
June 30, 2006 was estimated to be C$5.45 per option and was
determined using the Black-Scholes option pricing model with the
following assumptions: expected volatility of 64 percent, risk-
free interest rate of 4 percent and expected lives of 4 years.
The fair value of the options granted in the six months ended
June 30, 2006 was estimated to be C$4.79 per option and was
determined using the Black-Scholes option pricing model with the
following assumptions: expected volatility of 65 percent, risk-
free interest rate of 4 percent and expected lives of 3.8 years.
There were no options granted in the first six months of 2005.
(d) Contributed surplus:
The changes in the contributed surplus balance are as follows:
---------------------------------------------------------------------
Balance, December 31, 2005 $ 14,430
Options granted 3,174
Options exercised (1,531)
---------------------------------------------------------------------
Balance, June 30, 2006 $ 16,073
---------------------------------------------------------------------
---------------------------------------------------------------------
(e) Per share amounts:
The loss per share is based on the weighted average shares
outstanding for the period. The weighted average shares
outstanding for the three and six month periods ended June 30,
2006 were 218,985,821 and 211,045,789 respectively (2005 -
183,804,617 and 183,670,798).
3. Income taxes:
The Company does not expect to incur current income taxes in 2006 due
to the availability of previously unrecognized tax loss carry-
forwards.
4. Segmented information:
The Company's activities are conducted in two geographic segments:
Canada and Algeria. All activities relate to exploration and
development of petroleum and natural gas in Algeria.
Three months ended June 30 Canada Algeria Total
---------------------------------------------------------------------
2006
Capital expenditures $ 148 $ 40,002 $ 40,150
---------------------------------------------------------------------
2005
Capital expenditures $ - $ 10,578 $ 10,578
---------------------------------------------------------------------
Six months ended June 30 Canada Algeria Total
---------------------------------------------------------------------
2006
Capital expenditures $ 182 $ 74,202 $ 74,384
Assets 191,610 450,328 641,938
---------------------------------------------------------------------
2005
Capital expenditures $ 17 $ 23,070 $ 23,087
Assets 142,472 332,814 475,286
---------------------------------------------------------------------
/For further information: Enquiries: First Calgary Petroleums Ltd., Richard G.
Anderson, President and CEO, Tel: (403) 264-6697; or John van der Welle,
Finance Director and CFO, Tel: +44 (0) 203 043 0270; Website: www.fcpl.ca;
Other contacts: James Henderson, Pelham Public Relations, Tel: +44 (0) 207 743
6673; Carina Corbett, 4C - Burvale Limited, Tel: +44 (0) 207 907 4761./
(FPL)
END
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